BP for instance, forecasts there will be 12mln electric vehicles (EVs) on UK roads by 2040.

READ: AMP to raise £8.5mln to retire convertible loan stock

That was one of the reasons why the energy giant snapped up Chargemasters, operator of the UK’s largest EV charging network, last summer.

Richard Burrell, chief executive of Aggregated Micro Products Holdings PLC (LON:AMPH) believes that even with the likes of BP getting involved the issue of where all the electricity will come from to power these vehicles has yet to be addressed.

It is also why AMP is looking at diversifying into EV charging.

Currently, AMP’s grid balancing arm operates two natural gas-powered sites in Kent and Essex with capacity for about 24Mw of electricity that can be switched on at times of peak power demand, but the focus is switching to smaller sites of 2-4Mw capacity.

Burrell wants to add 25 sites in Greater London and extend its reach into the North-West around Liverpool and Manchester.

Synergies

All you need is planning permission and a connection to the gas network, says Burrell, who adds that as its generators are roughly the size of two containers they can easily fit on bits of unused land.

AMP currently generates most of its revenues from wood fuels and combined heat/power boiler businesses.

In the first half of its financial year, AMP delivered over 80,000 tonnes of wood pellet and wood chip to nearly four million customers. It also provided service and maintenance to around 900 biomass boilers.

And Burrell sees many synergies between this business and new EV charging outlets.

“A small-scale power generator is an attractive proposition. It’s all about providing power where it’s needed most,” he told Proactive.

“We are believers in clean energy distributed at down a local level and not dependent on national grid or big power stations.

READ: AMP posts sharp rise in H1 revenue

Broker finnCap recently repeated its price target of 135p for AMP after the firm published its half-year results which showed a sharp rise in revenue and gross profit.

The target compares to market price currently of 90p, implying upside of 50%.

“The group’s strategy has evolved over recent years and in the short term, the majority of its revenues and profits are expected to be generated in the wood chip and wood pellet markets, through its main trading subsidiary, Forest Fuels.

“Its Project Development activities are expected to be widened and will benefit from regulatory changes with new areas such as grid balancing and peaking plants expected to become a good growth area for the group.”

finnCap notes the UK government has a legally binding target of reducing the UK's greenhouse gas emissions by 80% by 2050 against 1990 levels.

READ: AMP’s Incubex associate to launch North American environmental futures

Some 8GW of coal-fired generating capacity has already been decommissioned since 2012 and a further 10GW is expected to close by 2025, most of which will happen by 2020.

In addition, 2GW of gas-fired combined plants are expected to close by 2020. Taken together, this represents approximately 25% of the UK’s generating capacity.

With some nuclear generators also being decommissioned the supply of electricity is becoming much more volatile and has increased the need for flexible and controllable stand-by supplies.

finnCap forecast revenues this year to March will rise 18% to £51mln and adjusted profits will come in at £1.1mln.

The broker’s share price target is based a sum-of-the-parts valuation, which also includes credit for AMP’s 29.8% stake in carbon trading exchange Incubex and its off-balance sheet boiler project vehicles Ampil 1 and 2.

“With forecast year-end net cash of £4.7m, the balance sheet is now much stronger and supports further growth,” read a recent note.

It is just over a month since the company upgraded sales guidance for the second time for the year to the end of March, saying turnover would be at least £42mln, and in fact, it clocked in at £43.16mln, up from £19.72mln the year before.

READ: Biomass boiler specialist Aggregated Micro Power Holdings PLC

The bulk of the revenues - £40mln (2017: £15.8mln) came from the wood fuels divisions, which chipped in with underlying earnings (Ebitda) of £1.9mln (2017: £750,000).

Profit before tax for the group as a whole soared 78% to £1.66mln from £933,480 the previous year.

Net assets at the end of March stood at £18.0mln, up from £10.4mln the year before.

The company said it is considering opportunities in the evolving energy market and is looking at electrical vehicle charging, infrared heating, battery storage, renewable electricity supply, green gas and compressed natural gas (CNG).

Among the company’s objectives for 2018 is to supplement its cash resources with additional new funding.

"Our company continues to develop at a frenetic pace. The highlights of the year were the completion of two further acquisitions and an increase of circa 100% in both turnover and net profit,” said Richard Burrell, the chief executive of Aggregated Micro Power.

“We are exceptionally busy and 2018 promises to be an equally exciting year," he added.

Turnover for the year to March will be more than £42mln, against the £40mln forecast previously. AMP had already raised its revenue forecast from £30mln.

READ:Aggregated Micro Power has biomass appeal

Profits for the year will be ahead of last year at £1.8mln, with an increase in the value of 29%-owned financial products associate Incubex offsetting restructuring costs and one-off costs.

Richard Burrell, chief executive, said: “We have seen a significant expansion of our operations in 2017 and 2018 and we look forward to further progress across our Biomass Heat Business, our Projects Business and from our Investments in the new financial year."

The group installs commercial size biomass-fuelled boilers used by schools, care homes and business parks.

READ Aggregated Micro Power ups revenue forecast by a third after cold blast

These are financed by two special purpose vehicles AMPIL 1 and 2, a method that frees up capital to fund more new projects.

AMP provides fuel for the boilers (wood chip and wood pellets) and commissions and installs them on a long-term contract.

Billington Bioenergy fills a northern gap

The acquisition last year of Forest Fuels made AMP one of the UK’s largest woodchip suppliers and recent acquisitions have taken it deeper into wood pellet supply.

The latest purchase, Liverpool-based Billington, fills a gap in the network in the north-west, chief executive Richard Burrell told Proactive.

“We can now serve most customers in most prices at very competitive prices and quality.”

The company was bought from Drax Smart Supply for a consideration of £2.0mln, comprising £1.6mln in new ordinary AMP shares at an assumed price of 98.5p each and £400,000 in cash.

The issue of shares as part of the acquisition means power station-operator Drax now owns around 4% of the company.

Based in Liverpool, Billington supplies 40,000 tonnes of premium wood pellets a year to more than 1,500 commercial customers from four depots.

Revenues in 2016 were £6.8mln with a loss before tax of £430,000, including a management charge to Drax.

Burrell said Drax would be a long-term investor and the two companies will work together on a number of projects and it was an excellent fit with Forest Fuels.

Prior to Billington, AMP acquired the wood pellet assets and customer base of CPL Distribution, a business turning over £5.1mln annually.

Peaking plant progress

AMP is also branching out into power supply and has more than 120Mw of grid-balancing projects with planning permission and grid connection offers. These peaking projects kick-in when demand is overwhelming the grid, such as when Britain was in the grip of the “Beast from the East”.

In January 2017, funding of £14mln came through for its first peaking plant in Kent, a project that will comprise some 21Mw of natural gas reciprocating engines.

The finance is being provided by funds managed by Triple Point Investment Management.

“AMPH will earn project development fees, on-going operation and maintenance fees and has shares in the project which are subject to a hurdle return being achieved by Triple Point,” said Burrell.

Burning brightly, judging by the half-year performance

In December, the company said it expected the second half of the financial year, which runs to the end of March, to be strong after it produced a solid first-half performance.

In the six months to September 30, it grew revenues 217% to £11.2mln, while gross profits increased almost 300%. As is common with businesses at the formative stage of its commercial development, AMP was loss-making – to the tune of £2.44mln at the pre-tax level.

The company helped AMPIL 2 raise almost £30mln for further boiler and combined heat and power (CHP) and future grid balancing projects.

The special purpose vehicle now has over £50mln invested or available for future opportunities.

Its project development business was on course to complete or reach financial close on a number of larger projects during the second half; as a result, AMP expects to generate more than £30mln of turnover for the year.

The executive chairman, Neil Eckert, said: “With the strength of our position in the wood fuels market and our growing pipeline of project developments in biomass and grid balancing, we look forward to the future with confidence.”

AMP eyeing dividend payments as it proposes a capital reduction

That future may include dividend payments after the firm unveiled plans to reduce the firm's capital, kick-starting a process that could see dividends being paid to shareholders.

The company currently does not have any distributable reserves and is therefore not allowed to pay divis but the board thinks now is the time to change this.

As of March 16, the share premium account (an undistributable reserve) stood at £22.73mln.

The capital reduction plan, which was approved by shareholders in April, will eliminate the firm's profit and loss deficit and create distributable reserves.

This involves cancelling the credit of the share premium account and transferring it to the profit and loss account - reducing capital and providing more flexibility to pay dividends, the group said.

Formerly known as Dong Energy, Orsted took up a third of a US$5mln fund round by Incubex, which is 29.08%-owned by AIM-listed renewable fuels group Aggregated Micro Power Holdings plc (LON:AMPH).

READ: Aggregated Micro Power Holdings set for boost from Incubex revaluation

Incubex and its partners such as the European Energy Exchange are developing financial products to support the renewable energy industry. The group was founded and is chaired by Neil Eckert, AMPH’s executive chairman.

Orsted is now a major player in the offshore wind business having at one time been Denmark’s state-owned oil and gas company.

The Danish group has committed fully to renewable sources of energy and will stop using coal by 2023.

It is building one of the world’s largest wind farms at Hornsea, off the coast near Grimsby and scheduled to come onstream in 2020.

Søren Scherfig, Orsted’s Head of Markets will join the board of Incubex,

Scherfig said IncubEx is an innovative frontrunner in the building and aligning of commodity products to meet market demand.

"Our cooperation represents an opportunity for us to accelerate the maturity of these global markets and ultimately the green transition".

Eckert added: "This is a significant development for us.

"Ørsted are trailblazers in the environmental space. Our business is growing quickly and this raise gives us the working capital and balance sheet to pursue our goals."

The business sells wood fuel and pellets for domestic use and commercial-size biomass-fuelled boilers in schools, care homes and business parks.

AMPH added the results to March will also include one-costs related to the acquisition of Billingtons and CPL Distribution over the past year.

Richard Burrell, AMP’s chief executive, said: “Our business continues to grow and the restructuring of our fuels business under the Forest Fuels brand should provide us with a strong platform for future growth in 2018 and beyond."

In mid-morning trading, Aggregated Micro Power shares were up 2.5% at 102.5p.

The company, which sells wood fuels and installs commercial-size biomass-fuelled boilers, currently does not have any distributable reserves and is therefore not allowed to pay divis, but the board thinks now is the time to change this.

READ: Aggregated Micro Power hails first half performance; expects even better end to the financial year

The firm will also convene a general meeting on April 11, in which the board recommends shareholders approve this capital reduction.

The company specialises in the sale of wood fuels and installs commercial-size biomass-fuelled boilers used by schools, care homes and business parks.

READ: Aggregated Micro Power unveils £3.7mln premium share placing

These are financed by two special purpose vehicles AMPIL 1 and 2, a method that frees up capital to fund more new projects.

In the six months to September 30 it grew revenues 217% to £11.2mln, while gross profits increased almost 300%. As is common with businesses at the formative stage of its commercial development, AMP was loss-making – to the tune of £2.44mln at the pre-tax level.

Strong half year

Operationally it has been it has been strong half year. The company helped AMPIL 2 raise almost £30mln for further boiler and combined heat and power (CHP) and future grid balancing projects.

The special purpose vehicle now has over £50mln invested or available for future opportunities.

AMP has also made a series of acquisitions, including the £2mln purchase of Billingtons woodchip business from power generator Drax in October.

It is also branching out into power supply and has 120 megawatts of gas-fired peaking plants and battery storage facilities currently seeking planning permission of which 90 megawatts has pre-qualified for the next Capacity Market auction.

Balance sheet boosted

Financially, AMP last month plumped up the balance sheet with a £3.7mln City fundraiser.

It was also upbeat on the outlook. The impact of recent acquisitions plus the seasonal nature of the business should boost both the top and bottom lines in the second half.

Similarly, its project development business expects to complete or reach financial close on a number of larger projects during this period. As a result, AMP expects to generate more than £30mln of turnover for the year.

Chairman Neil Eckert said: “With the strength of our position in the wood fuels market and our growing pipeline of project developments in biomass and grid balancing, we look forward to the future with confidence.”